Chile's salmon output likely to fall sharply under new rules

PUERTO MONTT, Chile, July 25 (Reuters) - Chile's farmed
salmon production could drop by almost 25 percent because of
stricter regulations aimed at tackling environmental crises that
have decimated fish populations in recent years, government and
industry sources say.

Salmon farms in the nation's misty, cool south have been
mired in a boom-and-bust cycle, with production climbing during
good years and then falling due to the bacterial, viral and
algal outbreaks that have become increasingly common.

A massive algal bloom killed up to 20 percent of Chilean
salmon this year, costing millions of dollars and likely cutting
annual production to around 650,000 tonnes, a level last seen in
2011, when the industry was recovering from an outbreak of
infectious salmon anemia virus.

That represents the low end of what the government expects
to be a new reduced permanent range for production resulting
from incoming rules aimed at reducing fish densities in pens by
27 percent, Raul Sunico, the head of the Chilean government's
Subpesca fishing and aquaculture body, told Reuters.

The specter of a permanent drop in production in Chile, home
to the second largest salmon farming sector after Norway,
highlights how Chilean salmon farm producers are still
struggling to come up with a sustainable business model.

Companies and analysts have predicted the global supply of
salmon will fall by between 5 percent and 9 percent in 2016 due
to declining production in Norway and Chile, likely leading to a
jump in prices for consumers.

The Chilean production decrease would represent a 24 percent
drop from the average annual output of the past four years.

Some companies argue that the reduced density rules raise
the regulatory burden on salmon farms and could wind up hurting
the industry's competitiveness without solving its most pressing
sanitary issues.
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